HIGH EXCHANGE BATE

Press, Volume LXIX, Issue 20987, 16 October 1933, Page 8

HIGH EXCHANGE BATE

IMPRESSIONS FORMED IN ENGLAND INTERVIEW WITH MR DAVID JONES

"I note that the exchange rate is still a live question in New Zealand —it creates a great deal more interest here than in Britain," said Mr David Jones, chairman of the New Zealand Meat Producers' Board, who has returned to the Dominion alter a visit'to Britain. "We were promised that all sorts of disaster to our credit overseas would follow increased exchange. The success of the recent 3i per cent, loan answered that very effectively. The increase had not had the slightest adverse effect on our credit, but if the exporters from the Dominion had been allowed to drift into bankruptcy because of the disastrous fall in world prices then our credit would have been seriously damaged and might have led to default. "The most striking thing in Britain to-day is the financial modesty of those in banking and financial circles, who frankly admit the great blunder they made in going on.the gold standard in 1925; a blunder of the banking authorities and advised against by so many so-called quacks. The best of them are very loath to criticise. They see the world's financial system rocking, they agree to put in props here and there, but they frankly admit that they are not certain that the prop will not have the effect of giving things a list too far in the opposite direction. Government Management. "We are familiar with the statement of the chairman of the Bank of England that he only sees a glimmer of light and there is a general agreement that the future is full of uncertainty, and forecasting is largely guesswork. One of the great cries in the Dominion was that there should be no interference with the banks, and Government management of currency should be avoided at all costs. Such criticism is never heard in London, because they know that nearly all countries are managing their currencies and Government control more or less is considered imperative.

"I did not hear the question raised in Britain that the depreciation of its currency only favoured a certain class. They realise—and no one realises it more than the workers—that if the export trade of Britain t fails then Britain fails. New Zealand is in the same position. Britain Idid it to save her exporters, who [were the manufacturers and the life blood of England. New Zealand did lit to save her exporters, who were the farmers, the life blood of the Do- | minion—for without their production j iand export, imports were impossible. "The British Chancellor of the Exchequer, Mr Neville Chamberlain, put it in these words at the re- \ icent World Conference in London: 'ln the opinion of the United King- j !dom delegation, an attempt to obtain equilibrium by further large reductions of cost would be attended !by intolerable suffering and holds out no hope of success. No doubt |it would be possible to restore equilibrium between prices and costs by I reducing costs if only prices would remain steady. Under present con- ] ditions that does not happen, but, on ithc contrary, an all-round reduction iin costs produces further deflationlary effects on prices, so that costs and prices chase one another downwards without ever getting to equilibrium.' This statement definitely supports our views." Danish Precedent. "It has been said that our exchange is against the spirit of the Ottawa Agreement. The Danish agreement with Britain was signed on April 24, 1933, three months after Denmark had increased her exchange under a Socialist government to 25 per cent., and no reference to the rate of exchange is in the agreement, nor are we aware that it was even discussed. "Among others I saw in London was a banker whom I had reason to believe was against our present exchange. He was a man of wide experience, and, I knew, familiar with New Zealand finance, and I wanted his opinion. I told him I had sought the interview with him because of the very great importance to the Dominion of pursuing the right course. He said his opinion was that the Government had, during the last 12 months, handled the finance of the Dominion in a very satisfactory manner, and he was not j alone in that view. The action that I had been taken covering finance gen- ! erally was one upon which he would like to congratulate New Zealand." In his discussion with this authority Mr Jones referred to the prospect of improved prices for New Zealand exports and asked whether his opinion was that we should begin to reduce our rate gradually or leave it where it was, at 25 per cent. He replied, "No one knew what would be" the result of the Roosevelt policy in America, for instance, and until finance was fairly stable and one could gauge land and other values on the higher price level that must come to give the world any reasonable prosperity, then his opinion firmly was that we should continue the present rate of exchange."